S'pore taking steps to facilitate sustainable financing: Indranee

Mobilising sustainable finance has its challenges, but Singapore is taking steps to mitigate them, said Minister in the Prime Minister's Office Indranee Rajah yesterday.

Speaking at a conference here, she said global leaders at the recent COP26 meetings in Glasgow, Scotland, had highlighted the importance of mobilising finance to meet the net-zero emissions target.

However, it would be insufficient to rely on public funding alone, given that Covid-19 has strained fiscal resources worldwide, she said in her keynote address at the 5th German-Singaporean Financial Forum at the Conrad Centennial hotel. It was organised by the Singaporean-German Chamber of Industry and Commerce (SGC).

"Sustainable financing will therefore play a key role in crowding in private capital to facilitate the orderly transition of economies towards renewables and low-emission sectors," noted Ms Indranee, who is also Second Minister for Finance and National Development.

She said one of the major challenges to developing a credible sustainable finance market is greenwashing, which refers to misleading information provided by a company or bond issuer on its environmental, social, and governance (ESG) credentials.

"To mitigate this risk, Singapore has been working with industry and international partners to put in place key enablers for credible disclosures," she added. "We are also harnessing technology to enhance access to trusted, high-quality climate-related data."

Ms Indranee highlighted the Monetary Authority of Singapore's (MAS) Greenprint initiative under which it is partnering the industry to develop interoperable platforms that will provide the data needed by the green finance ecosystem.

She said MAS and the Singapore Exchange are also setting up road maps for mandatory climate-related financial disclosures by financial institutions and listed entities.

Finally, Singapore is also contributing to the development of globally interoperable taxonomies to improve sustainability disclosure. A taxonomy for sustainable finance refers to a set of criteria that provides the basis for an evaluation of whether and to what extent a financial asset will support given sustainability goals.

Ms Indranee said that as an international financial centre, Singapore can catalyse the flow of capital towards sustainable development in Asia.

Between 2017 and last year, $22.5 billion worth of green and sustainability-linked loans were issued here, accounting for close to half of cumulative green bond and loan issuances in the Asean region. These loans cover a broad range of sectors such as agriculture, commodities, energy and financial services.

The Government is also leading the way to promote sustainable financing by issuing its own sovereign green bonds and laying the framework and rules for green financing, Ms Indranee said.

The Republic plans to issue green bonds on selected public infrastructure projects and has identified up to $19 billion worth of public-sector green projects for this.

For instance, the Ministry of Finance has set up the Green Bonds Programme Office to develop a national Green Bond Framework, assist statutory boards with the development of their own green bond programmes, engage the industry, and manage investor relations.

Mr Niall Bohan, director of asset and financial risk management for the Directorate-General for Budget in the European Union, said the European Commission, on behalf of the EU, raised €12 billion (S$18.5 billion) last month in the first NextGenerationEU green bond transaction - the world's largest.

This transaction paves the way for the largest green bond programme in the world, said SGC president Jens Ruebbert.

Mr Douglas Foo, president of the Singapore Manufacturing Federation (SMF), said SMF has been advocating to include ESG considerations in business models, and is paving the way for that through dialogues, webinars and discussions with agencies, organisations and other trade associations.